“The announcement of the budget, which didn’t give any benefit to discretionary retail and more specifically provided nothing to our consumer, is part of a number of cumulative issues affecting consumer sentiment," Mr Brookes said.

Myer’s sales had risen in February and March but had fallen 4 or 5 per cent last month and in the first few weeks of this month, despite the interest rate cut of half a percentage point on May 1.

Myer’s total sales for the 13 weeks ending April 28 slipped 0.9 per cent to $651.1 million and same-store sales were down 2.1 per cent, compared with broker forecasts for a 2.3 to 3 per cent decline.

Total sales excluding categories which are being exited or wound back – such as whitegoods, movies and music, gaming and consoles – fell 1.6 per cent on a same-store basis.

Myer had previously been forecasting net profit to fall by up to 10 per cent. However, to achieve this result, sales in the second half needed to be largely flat.

Mr Brookes blamed the profit downgrade on the deterioration in top line sales, saying that gross profit margins, costs, shrinkage and inventories remained on budget.

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“The issue is simply top line sales that have fallen back in the last few weeks by 4 or 5 per cent," he said.

“All those things are things we can’t control – the things we can control are going well.

“Despite the challenging sales environment, we are continuing to see positive customer feedback from our investment in improving service, the addition of new wanted brands, growth in our Myer exclusive brands as well as our enhanced loyalty program."

Myer shares posted their biggest one-day fall in 15 months, dropping 14¢ or 6 per cent to $2.03, their lowest level since February. The shares are now trading at less than half their 2009 float price of $4.10.

The new guidance suggests Myer will report a full-year net profit of about $138.3 million, falling slightly short of market consensus forecasts of about $141 million.

Citigroup analyst Craig Woolford, who had been forecasting an 11 per cent decline in net profit, said the downgrade was a sign that the ability to cut costs in line with the fall in sales was becoming harder to manage.

Mr Brookes said there was still scope for Myer to meet its original guidance if the retailer had a successful June stock-take sale, which accounts for most of second-half profits.

The stock-take sale fell short of forecasts last year, as fourth quarter sales fell 5.8 per cent.

Myer is introducing new initiatives to ensure a better customer response to the stock-take sale this year. It will offer tactical discounts of up to 60 per cent – compared with 40 to 50 per cent last year – as well as daily deals, multi-buys and a competition offering customers the chance to share in $250,000 of prizes.

The retailer will also offer unique discounts to MyerOne customer loyalty card holders to encourage people to visit the sale more than once. It will announce new offers in weeks three and four to encourage further spending.

“We’re banking on it being a very important part of our last quarter performance," he said.

Myer had no plans to curtail its $25 million investment in extra staff service hours, which is helping to boost the sales conversion rate, or to pull back on its omni-channel investment.

“We could have held guidance and cut wages at store level and cut investment in omni-channel, but we plan to look at the longer term view of the company rather than take a short-term approach to maintain guidance," Mr Brookes said.

In the third quarter, categories such as women’s youth, women’s wear and menswear were the strongest performers. But strong trading in Western Australia, South Australia and Queensland was offset by weakness in Victoria and NSW.

Myer also revealed that it had bought the women’s denim brand Grab to add to its portfolio of exclusive or private label brands.

Myer reached an agreement to buy Trent Nathan in March and bought sass & bide a year ago.